China is top foreign investor in the country's economic zones (EZ) as the number of its formal proposals outstrips 13 other nations.
Between fiscal year 2018 and December of 2020, China grabbed more than one-third of the proposals made in the zones, according to the data of the Bangladesh Economic Zones Authority (BEZA).
Economists said the US-China trade conflicts are forcing Chinese manufacturers to relocate their production facilitates to alternative locations and Bangladeshi zones will be able to attract those investors.
In FY 2019, China was the largest source of FDI in Bangladesh.
Talking to the FE, executive chairman of the BEZA Paban Chowdhury said investment from China will increase further while investors from Japan will also come in a big way by the next year.
He said the signing Free Trade Agreements (FTAs) with other countries is necessary to ensure market access to the investors.
Though the BEZA is encouraging environment-friendly investment, most of the Chinese investors are showing interest to invest in the chemical sector and coal-fired power generation.
He said the government has developed all utility services, including a 400 KV electricity plant at the Bangabandhu Sheikh Mujib Shilpanagar (BSMS).
The mega zone on 30,000 acres of land, equivalent to 79 such industrial parks, would be able to attract FDI in the coming years, he said.
Al Mamun Mridha, joint secretary general of the Bangladesh China Chamber of Commerce and Industry (BCCCI), said some factors, including the dissemination of information, repatriation of profits and currency issues need to be addressed to woo more Chinese investors.
"We are going to hold a road-show in China this year for promoting our investment opportunities," he said, adding that a meeting on it was held on Tuesday at the Bangladesh Investment Development Authority (BIDA).
Bangladesh has geographical advantages to attract FDI compared to Hong Kong and Singapore, he said.
He, however, suggested reducing hassle of investors while commuting to the destinations from airports, cut the requirement of documentation, improving One-Stop Services (OSS), resolving land disputes, etc.
He said only two companies relocated to Bangladesh from China, which can be increased further by addressing those issues.
Mr Mamun expressed his optimism over the zone development activities and pledged to support the Chinese investors through the BCCCI.
Dr Mohammad Abdur Razzaque, research director of the Policy Research Institute (PRI), said China is investing massively under its Belt and Road Initiative and it has pledged to invest more than $27 billion.
"Many Chinese investors want to relocate their less technology-intensive manufacturing units outside China as its government is now pushing for more capital and technology-intensive industrial transformation for China," he texted on WhatsApp.
However, Chinese investors in traditional sectors are looking for a country with proven supply side capacity and low wages, he said.
Bangladesh has duty-free access to the Chinese market to attract its investors, he added.
"There are other investors from different countries who don't want to invest in China due to geopolitical pressure, but want to get market access to China. They are also looking for a third country to relocate their investment," he said.
Although geopolitical rivalry between India and China is making it difficult to materialise more Chinese investment into that country, Myanmar is reaping benefit of it, he said.
With new investment prospects arising from China, Bangladesh needs to delicately manage bilateral relations both with China and India, he said.
According to an FE analysis based on BEZA's data, 10 Chinese companies have placed FDI proposals worth US$ 3,215 million out of $ 9,126.661 million proposals submitted to the BEZA from 13 countries.
The BEZA has so far completed the allotment of lands to some 38 foreign companies of different countries at BSMS, Moheshkhali Economic Zone-3, Sreehatta EZ, Sabrang Tourism Park and some private EZs.
Except for China, the country's zones have received investment proposals from India, the UK, the USA, the Netherlands, Thailand, Japan, Singapore, Australia, South Korea, Malaysia, Norway, and Germany from fiscal year 2017-18 to December of the current fiscal.
BSMS at Mirsarai, Feni and Sitakundo attracted the highest FDI proposals worth US$ 6.38 billion among the EZs under operation including private ones.
Of the FDI proposals, the BEZA has got highest investment proposals worth US$ 2,529.47 million from the Chinese Hangzhou Jinjiang Group Co. Ltd.
Already, the allotment of around 500 acres of land has been made to the company that proposed to invest in 1,320 MW coal-fired power plant.
Among other Chinese companies, Beijing Zhenyuan Henghui Engineering consulting Co. Ltd placed investment proposals worth $ 304 million, followed by Jiangsu Yabang Dyestuff Co. Ltd $ 300 million and Zhuzhou Jinyuan Chemical Industry Co. Ltd $ 28 million.